Clearing the Air

In 1989, two scientists at Unocal Corp. found a way to make
cleaner-burning gasoline. Gregory Wirzbicki '68, the company's chief
patent counsel, protected their discovery with a patent. That might
have been the end of the story, but instead it was just the beginning
of a long, bitter court battle that would pit one company against an
entire industry.

By Michael W. Dorsey, Photography by Patrick O'Connor

He arrived in California in 1968 with his freshly earned WPI bachelor's degree in chemical engineering and a desire to make a new start. A native of Hartford, Conn., Greg Wirzbicki had decided, after two decades of New England winters, to relocate someplace where nearly every day brings beach weather.

As he traveled about the Southern California Basin, he saw the bright California sun filtered through a brown haze that stung the eyes and irritated the throat. The government was also paying attention to those brown skies. Air pollution in Los Angeles was a known problem as far back as the 1940s. California, which consumes about a third of the nation's gasoline, passed its first bill limiting tailpipe emissions in 1959. A decade later, Congress enacted the Clean Air Act of 1970, the first national law to take serious aim at pollution from automobiles.

There are two basic ways to curb auto emissions: (1) build engines that burn fuel more completely--or equip them with devices that treat pollutants before they enter the air; and (2) produce fuels that pollute less when they're burned. Federal and state legislation took both of these approaches (mandating catalytic converters, for example, and banning leaded gas). But as time went on, attention increasingly focused on finding cleaner-burning fuels.

Wirzbicki didn't know it, but in a few years his career would take a sharp turn that would place him in the thick of the race to clean the air. It was a race that would begin in the research laboratory, but move quickly into the courts, blossoming into one of the largest and most fiercely waged legal battles ever fought over intellectual property in this country.

It was serendipity that brought Wirzbicki to his present position as chief patent counsel for Union Oil Co. of California, the operating subsidiary of Unocal Corp. While working as a water treatment chemist at Southern California Edison, he decided to enroll in an evening business program. Finding the classes full, he learned that Loyola University in Los Angeles had openings in its evening law program.

In 1972 he received his Juris Doctor and passed the California bar. Less than two years later, a job as a patent attorney opened at Unocal, and Wirzbicki opted for a career change. "It was a big week for me," he says. "I got a new job, I bought a house and I got married."

In Unocal's legal offices, he waded into patents for new polymers, catalysts for refining crude oil, and geothermal energy, among other areas. "I got to work with some really brilliant scientists," he says. "I enjoyed being able to take what they had discovered and protect it with patents."

Among those brilliant scientists were Peter Jessup and Michael Croudace, chemists whose specialty is the chemical formulation of gasoline. In 1989 they made a research proposal on behalf of Unocal to a coalition of 14 oil companies and the Big Three automakers, which had agreed to work together to look for ways to reduce auto emissions.

The impetus for this unprecedented collaboration was uncertainty over new Clean Air Act amendments that were taking form in Congress. There were strong indications that the new act would call for serious reductions in hydrocarbons and toxics in auto emissions, leaving oil companies little alternative but to switch from selling gasoline to making non-petroleum fuels, such as natural gas and ethanol.

The Auto/Oil Group, as it came to be known, decided to jointly sponsor research to look for new gasoline formulations that would create fewer pollutants. They hoped to show that reformulated gasolines, or RFGs, could begin to clean the air immediately, since they can be burned in existing vehicles and can be made with only modest changes to refineries.

Gasoline is a complex blend of hydrocarbons that interact to create an array of physical properties. The first question the Auto/Oil Group needed to answer was which of these many components and properties were worth studying. The answer could have a significant impact on the complexity and cost of the research.

"Jessup and Croudace brought the group a proposal to do an initial screening of 10 parameters to see which were the bad guys and which were the good guys," Wirzbicki says. "Their proposal was rejected. The consortium decided instead to run just four of those parameters."

Fearing that important relationships might be missed, Croudace and Jessup convinced Unocal to let them run independent research on all 10 parameters: aromatics, olefins, paraffins, MBTE (methyl tertiary-butyl ether, an oxygenate that helps fuel burn more completely), T10, T50 and T90 (the 10, 50 and 90 percent distillation points, or the temperatures at which 10, 50 and 90 percent of the fuel would evaporate), Reid Vapor Pressure (the vapor pressure of a gasoline at 100 degrees Fahrenheit), research octane, and motor octane. Conducting research independent of the consortium group was permitted by the joint study agreement all the participants had signed, Wirzbicki notes.

The two Unocal scientists blended 15 combinations of ingredients and burned them in a test vehicle. They found that two properties, T50 and Reid Vapor Pressure, were the primary means to controlling tailpipe emissions. Research octane number, olefin content, paraffin content, T10 and T90 also had important effects. Of these seven characteristics, only two (olefins and T90) were among the parameters included in the Auto/Oil Group study. None of the characteristics the consortium chose to investigate in its four-parameter study were found to have a primary effect on emissions in the Unocal studies.

After an independent research laboratory verified their results, the Unocal scientists were confident they had discovered keys to producing clean-burning gasoline. It was a major breakthrough with great commercial potential. They brought their discovery to Wirzbicki, who was by then the company's chief patent counsel.

Wirzbicki began work on what would be the first of five patent applications he would file with the U.S. Patent Office over the subsequent decade to protect the work of Jessup and Croudace. While the application worked its way through the Patent Office, Unocal shared its research results with the Auto/Oil Group and with the California Air Resources Board (CARB), which was developing new clean air regulations.

"Unocal felt it was important to tell CARB about our data," Wirzbicki says. "Jessup and Croudace wanted the government to have the best data available and to reach its own conclusions as to what to do with it. But more important, Unocal was among the parties that were most interested in having the regulations be as flexible as possible."

In 1991, CARB issued its Phase 2 RFG rules, which called for oil companies to begin making RFG by March 1, 1996, and to sell only RFG after June 1 of that year. Unocal received U.S. Patent No. 5,288,393 on Feb. 22, 1994. The patent covered the combinations of factors that Jessup and Croudace had found to impact auto emissions, as well as many fuels that might be blended to achieve those factors--automotive gasolines that would meet the new CARB regulations.

The following January, the company announced it would soon begin licensing its protected formulations to other companies. In the legal offices of the nations' largest oil companies, the wheels began turning.

"The judge was seeking to sanction the oil companies
for the vexatious way in which they handled this case."

In mid-April 1995, just before Unocal's licensing program was set to begin, Atlantic Richfield, Chevron, Exxon, Mobil, Shell and Texaco sued Unocal in U.S. District Court, asking that its RFG patent be declared invalid. They argued that the claims in the patent were based on prior art (for example, that the formulations resulting from the claims resembled certain aviation and racing fuels) and obvious to one skilled in the field.

They suggested that Unocal had usurped the CARB regulatory process for its own gain because the company had narrowed the claims of the patent after the CARB regulations were released with the result that the claims "resembled" the regulations. And, they claimed that the patent was unenforceable due to "inequitable conduct" in the way Unocal had prosecuted the patent application before the patent examiner. In response, Unocal countersued, arguing that the plaintiffs (which by then were all selling RFGs to meet the CARB regulations) had infringed its patent, and were continuing to do so.

Unocal, represented by the Minneapolis-based law firm of Robins, Kaplan, Miller and Ciresi, would successfully refute all of these claims in a trial that began in July 1997. For example, Unocal demonstrated that the claims in its patent were novel and not obvious to a skilled scientist in the field. The company also addressed head-on its prosecution of its patent application and its relationship to the CARB regulations.

Wirzbicki says he filed the first patent application 11 months before CARB issued its Phase 2 regulations. During the patent prosecution, the company kept the examiner in the U.S. Patent Office apprised of those regulations. He also notes that the amendments made during prosecution narrowed the claims, so that the resulting patent actually covered fewer potential gasoline blends than the original application.

The court also learned that the other oil companies became aware of the Unocal patent a month after it was awarded, but none asked CARB to reconsider its regulations. "Instead," Wirzbicki says, "they sued us to break the patent."

In October 1997, the jury decided that the Unocal patent was valid
and that the other oil companies had infringed it. A month later, it
said that Unocal was entitled to damages of 5 3/4 cents for each of
the 1.2 billion gallons of RFG the plaintiffs had already sold (about
29 percent of their California RFG output between March 1, 1996, and
July 31, 1996), for a total award of $69 million. The following year the presiding judge, Kim McLane Wardlaw, ruled that there was no inequitable conduct and that Unocal had acted properly and with good faith during the patent filing and prosecution process.

Wirzbicki notes that Judge Wardlaw also ordered the plaintiffs to pay nearly $1.5 million in legal fees to Unocal. "Assessing legal fees in patent cases is done only in exceptional cases," he says. "The judge was seeking to sanction the oil companies for the vexatious way in which they handled this case. One of the things she specifically pointed to was the fact that they had tried to influence her and the jury to believe that we hadn't told the patent office about the CARB specifications, when, in fact, the record was extremely clear on that."

By the time the case ended, the company had won two more patents, covering other aspects of the original research of Jessup and Croudace. Another would be received in November 1998; the last of the five patents for which Wirzbicki had written applications was awarded in early 2000. The additional patents covered more gasoline formulations and methods for burning the fuels to reduce pollutants, delivering and dispensing them, and blending them in refineries.

In December 1998, Unocal again wrote to major refiners and offered to discuss licensing. Instead, the other companies headed back to court, this time to file an appeal of the District Court's ruling in the U.S. Court of Appeals for the Federal Circuit in Washington, D.C.

Among other allegations, the appeal asserted that the claims in Unocal's initial patent were too broad to be patented, potentially covering every gallon of gas refiners must make during the summer months under California's regulations.

After the appeals court affirmed the lower court's ruling in March
2000, the plaintiffs filed a petition to have the case considered by the U.S. Supreme Court. Friend of the court briefs were filed on behalf of the plaintiffs by 34 state attorneys general and several industry organizations.

"The content of the amicus briefs showed a lack of understanding of the facts of the case," says David Beehler, one of the attorneys with Robins, Kaplan, Miller and Ciresi who represented Unocal at trial. "They were renewing claims that Unocal had tried to improperly influence the regulatory system, when that wasn't even part of the appeal."

In an opinion joined by two Patent Office officials, the U.S. Solicitor General recommended that the court reject the case, and within a month, the petition was denied. Ordinarily, a judgment by the Supreme Court signals the end of the road for a court battle, but the plaintiffs in this case had not yet exhausted their options.

After the high court ruling, the oil companies that sued Unocal petitioned the U.S. Patent Office to re-examine Unocal's first RFG patent. (An unnamed party requested a re-examination of the fourth patent.) Current U.S. patent law entitles anyone at any time to file a request for re-examination of any claim in a patent. The Patent Office rejected the request to re-examine the fourth patent, but decided to re-examine the first.

In March, ExxonMobil (the companies merged in 1998) asked the Federal Trade Commission to investigate the Unocal patents, claiming the company engaged in anticompetitive practices in patenting the results of its RFG research. ExxonMobil and CARB officials allege that Unocal attempted to deceive CARB about its research and patent application to gain a monopoly on the sale of RFGs. ("This is one of the claims that resulted in the assessment of legal fees," Wirzbicki says.) The FTC investigation is ongoing.

In the meantime, Unocal, which no longer sells gasoline, having sold its refineries and gas stations in 1997, is reaping the rewards of the discoveries of Jessup and Croudace. In October 2001, the U.S. District Court of Los Angeles granted Unocal's motion for summary judgment requesting an accounting of infringement against its first patent by the plaintiffs. The motion covers the period Aug. 1, 1996, to Dec. 31, 2000. The company had already received the $69 million (which grew to $91 million with interest and attorneys' fees) awarded it by the court.

The company has licensed all five of its patents to oil companies not participating in the litigation. To date, none of the original plaintiffs has signed a license with Unocal. In public statements, the company says it estimates that its patents will add less than one cent to the cost of reformulated gasoline sold nationwide (or about $10 per year per consumer).

"The real story from my point of view is these two inventors. They were seriously concerned that Auto/Oil was going the wrong way; that they wouldn't find out what the bad guys in gasoline were. The inventors thought they had a better idea. That is the name of the game when it comes to invention."

The file cabinets in Wirzbicki's office bulge with 10 years worth
of news stories about Unocal's patent trial, most of which, he says,
miss two important points.

"The real story from my point of view," he says, "is these two inventors. They were concerned that Auto/Oil wouldn't find out what the bad guys in gasoline were. They thought they had a better idea. That is the name of the game when it comes to invention. Yes, the cost of gasoline may have gone up slightly because of our patent, but every meritorious invention ends up costing the consumer at some point."

The other point is the one that Wirzbicki sees every day from his office window. In short, the brown skies are gone. The work of Unocal's scientists and the cooperative efforts of government and industry to make the widespread use of reformulated gasoline a reality have paid off in substantially cleaner air.

"From 1976 to 1989, there were at least 150 days each year in the Southern California Basin that exceeded the one-hour federal ozone air quality standard," he says. "By 1998, that was down to 65 days--a decrease of more than half. California says its Phase 2 regulations have been enormously successful. And after all, that's what this was all about to begin with."

Links related to this article

Unocal Corporation (includes information on RFG patents, including the full text of the patents themselves)